Critics argue that Mayor Sly James' stance undermines the city’s attempts to build an image as entrepreneurial, turning the dispute into a social media war of words.

by Lynn Horsley, McClatchy News Service
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May 19, 2014

Mayor Sly James is an enthusiastic cheerleader for Kansas City, Mo., which he wants everyone to see as hip, happening and the nation’s best hub for tech startups.

But suddenly he’s being slammed for putting the brakes on the new Lyft ride-sharing service. Critics argue that his stance undermines the city’s attempts to build an image as progressive and entrepreneurial.

It has turned into a social media war of words. A sampling from the recent flood of tweets to the mayor:

Some people say this battle is already hurting Kansas City’s credibility in touting itself as the nation’s most entrepreneurial city, despite having Google Fiber and a growing network of incubators for innovation.

Lyft is part of a wave of companies, also including UberX, that use a smartphone app to link part-time drivers using their own vehicles with willing passengers.

“All you need is for Twitter to light up as to how KC is anti-tech. This is a service that every techie in the world uses in their hometown or when they travel,” said Michael Lynch, 75, who moved back to the Kansas City area in January after living in San Francisco, where he was very familiar with Lyft. He described the service as prompt, safe and efficient.

“You can’t say you are for innovation and slam the door on the innovators,” Lynch said.

The mayor fires back that he’s all for progress and promoting the city’s reputation for innovation, but he also must protect the public with safe drivers, vehicles and adequate insurance.

“Being an entrepreneurial city doesn’t mean that you’re stupid and you’re unsafe,” he said in an interview. “Being open for business does not mean you throw away your obligations to provide for public safety.”

James draws a distinction between UberX, which he said is negotiating to comply with the city’s rules for driver and vehicle safety and adequate insurance, and Lyft.

“They just came into town, put pink fuzzy mustaches on the front of a bunch of cars and said, ‘Hi, we’re here to pick people up,’ ” James said.

City officials and a lobbyist for Lyft have had several conversations at City Hall, but so far those negotiations are at a standstill.

Lyft spokeswoman Erin Simpson said the company is fundamentally different from traditional cab companies and has tried to explain to the city that its business model doesn’t fit normal taxicab regulations that require licensing fees and inspections. Lyft says it is already working well with relaxed regulations in cities throughout California and places like Denver, Detroit, Indianapolis and Atlanta.

Simpson said Lyft’s local part-time drivers include an IT worker for Hallmark, teachers, graduate students and others who go through a rigorous background check. Drivers and passengers also rate one another, so bad actors on either side quickly get weeded out. She also said the company has ample insurance to cover accidents.

James said Kansas City isn’t going to just take Lyft’s word that it will safely transport passengers, just as it wouldn’t let restaurants inspect themselves. He said that’s why the city council moved swiftly on May 8 to clarify that Lyft was operating illegally under city code and why it has filed a motion for a temporary restraining order to halt Lyft until it reaches a reasonable agreement with the city. The motion could be heard in federal court as early as this week.

UberX is operating a free service in Kansas City until Friday, which allows it to bypass the city’s regulations. James and UberX officials say they are working on a way for the company to soon begin legally transporting paying customers.

New rides

Young people who have tried Lyft or UberX in other cities and even in recent weeks in Kansas City give both companies high marks for prompt, professional and affordable service. Many wonder why the companies and city haven’t already been able to remove the regulatory hurdles to their operations here.

Kathleen Bole, 25, said she rode Lyft in San Francisco last fall and the first few days when it opened here.

“They were the nicest taxi service type cars I’d been in,” she said, adding that the drivers showed up promptly and were very nice.

Bole said she also regularly uses cabs in Kansas City and has found them to be a good service that she believes can co-exist with Lyft. She recently moved to a neighborhood where cabs are not as available, so she thinks Lyft could be a good alternative.

“I think most people who have been to these larger cities agree that it’s almost a no-brainer,” Bole said of ride-sharing services. “Any new driving service in the market will make this a more attractive city for young people.”

Sumo Chatterjee, 23, who works for a large downtown corporation, said he’s constantly comparing Kansas City amenities with those his friends have in Chicago and New York. He’s part of a burgeoning movement to promote Kansas City as attractive to tech companies and millennials.

So when he first heard that KC was clamping down on Lyft, he was upset.

“In the very beginning, when I didn’t know anything, my first reaction was to demonize the city,” he said. But the more he has learned, the more he understands the reasons for regulations and inspectors.

He wishes both the company and the city had communicated better with each other and the public, rather than launching into a fight.

And he said this ongoing battle with Lyft is significant, especially for the city’s image as one of the nation’s most tech-friendly towns.

“When you want to be No. 1, everything matters,” he said. “I really hope this doesn’t set a precedent for other tech startups coming to the city.”

National tussle

To be sure, Kansas City isn’t the only city where this debate is playing out in a contentious way.

St. Louis Mayor Francis Slay has taken a stance similar to Mayor James’ position.

“I support technology, including so-called ‘disruptive’ technology,” Slay wrote in a recent blog post. “I also believe that no matter how sophisticated the technology is, regulations to protect public safety are generally necessary, and should always be enforced.”

St. Louis has gotten a temporary restraining order against Lyft and is in negotiations with UberX.

Lyft officials cite an agreement they just reached with Detroit, which allows the company to operate for the next two years while the city works on rules for ride-share services.

Lyft also operates in many California cities, which don’t have as much authority over such companies and where state regulations allow them.

“It’s going to make taxis go away, quite frankly,” predicted Bill Harris, spokesman for San Diego’s transportation and stormwater department. “The automated, online systems present a leap in technology that is going to be a marketing threat.”

However, Harris said the California Legislature may soon act with regulatory changes that affect these services.

The Federal Trade Commission has watched battles with Lyft and UberX across the country and wants to protect their ability to compete with more traditional taxi companies, according to Andy Gavil, director of the commission’s office of policy planning.

Established businesses often try to get regulators to put up barriers that slow or stop a new competitor, but that can pose a risk to a community’s reputation as open and progressive, he said.

“If they respond by protecting the incumbent businesses, they will deter and discourage the new entrant, and that will be bad for consumers,” he said.

Still, Bill George, president of Kansas City Transportation Group, which has both traditional taxis and the zTrip mobile app service, doesn’t buy the argument that these companies are different.

“They are providing transportation for hire,” he said. “It is crazy what these people think they can get away with.”

He said the mayor has taken a principled stance, and Lyft, UberX and other companies should fall under the same regulations as taxis and zTrip.

Sly James said UberX should soon be licensed to operate in Kansas City. Lyft can do that too, he said.

“We are extremely happy to welcome Lyft to town when they negotiate something with us that we think makes sense,” James said. “But it’s not going to be a matter of, ‘We’re going to do what we want to do, and screw your regulations.’ We cannot do that.”